Should I Lease or Finance a Car?
In 2016, 6.3 million cars were sold in the US. In 2017, 272.48 million vehicles were registered with the DMV.
When you’re in the market for a new car, you have the option to lease or finance. Both of them have their own set of pros and cons.
Many US citizens prefer to buy American-made cars. That’s why they head down to their local Chrysler dealership. They put their trust in the Chrysler Corporation because they’ve been in business since 1925.
But before you do head to a Dodge dealership near you, read this. We’ll help you determine whether to lease or buy that new automobile.
Whether It’s Better to Lease or Finance a New Automobile
Whether you lease or buy, most people searching for a new car will end up making monthly payments. And while there are definite financial implications for both leasing and buying, money shouldn’t be the only factor you consider.
Your lifestyle, personal taste, and preference should also play a big role in which decision you make.
Pros of Leasing a Vehicle
There are several great reasons to head down to your local Dodge Dealership and lease a vehicle such as:
No Need for Loan Approval
If your credit score isn’t great, you may not be approved for a car loan. You might also be subject to a high-interest rate if your credit score is low.
Since leasing companies can easily take back their vehicle if you fail to make payments or violate lease terms, they’re able to offer more flexibility.
Lower Monthly Payments
It’s also cheaper to lease a car than it is to buy one. And you can do so with a small or even no down payment.
There’s also no upfront sales tax to pay. Keep in mind that you may end up paying extra if you:
- Exceeded the mileage rate
- Have unrepaired damage
- Terminate your lease early
Otherwise, you can just hand in your car once your lease ends.
Fixed Term Rates
Most people lease a car for one to four years. Their rate is fixed so the amount they pay each month is directly tied to the amount of depreciation expected during the lease term.
You only pay for the depreciation of the car that happens while you’re leasing it. This way, you can never owe more money than the car is worth.
New Cars Mean Fewer Repairs
You get to drive a brand new car every few years that’s equipped with the latest technology, comfort, and safety features. And new cars mean fewer repairs.
You’re also covered by the manufacturer’s warranty during your lease term. Of course, you still have to pay for regular maintenance, upkeep, and insurance.
No Need to Sell Your Car
Once your lease term expires, you just return the vehicle. At that point, you can lease a new vehicle.
You never have to deal with selling your old car. You also don’t have to worry if you’ll get a fair trade-in deal.
And, if you like your leased car and don’t want to part with it, you might even have the option to buy it outright at a pre-set price.
Cons of Leasing a Vehicle
Of course, there are downsides to leasing a vehicle such as:
- Proving you have a stable source of income
- Often have to purchase additional gap insurance
- Will have to pay if you drive over the pre-set amount of mileage
You’ll also typically pay more money to lease a car than you will if you buy it.
Pros of Buying a Vehicle
There are many plusses to owning your own car such as:
It’s 100% Yours
If you finance a car, you own 100% of it. That means you can put as many miles on your car as you like without paying a penalty.
You can also customize your car. And if you decide you don’t want to maintain your car or even keep it clean, that’s okay too.
Less Expensive in the Long-Term
Yes, you’ll have to pay a sales tax up-front, but it’s cheaper in the long-term. Especially if you keep your car long after you’ve paid for it in full.
You also build up equity when you make your loan payments. The longer you drive your car, the less it costs.
Can Sell Your Car
When you decide you no longer want your car, you can sell it or trade it in. If you still carry a loan balance, you will have to pay the full amount at this time.
However, you decide when you want to get rid of your car. You’re not stuck in a fixed ownership period as you are with a lease.
Discount the Depreciation
Usually, within the first few years, cars depreciate between 20% and 40%. How much depends on the vehicle.
Buying a vehicle that’s already two or three years old mean you gain the advantage of paying a price that reflects the depreciation discount.
Cons of Buying a Vehicle
Once your warranty expires, you’ll have to pay for all repair costs. You’ll also have to deal with trading in or selling your used car when you decide you want a new one.
How to Find the Best Deals
There are a few ways to get a great deal no matter if you choose to lease or buy. Before you head to your Dodge Ram dealership, do some research on what kind of vehicle best suits your needs.
Do a car comparison to find out what their features are. Look at the ratings, safety record, and what type of mileage you can expect from each model.
Test Drive Vehicles
Take a test drive at your Chrysler dealership and ask plenty of questions. You want to know how the car operates on the road.
Test drive more than one type of vehicle. Comparing vehicles this way will help you narrow down your options.
Learn to Negotiate
Don’t be afraid to talk about money and numbers with the dealership. Before you go, take a look at your finances so you know exactly how much you can afford to pay each month.
Make lowering how much you’ll end up paying a priority in your negotiation. Once you’ve agreed upon a price, carefully read the terms of your agreement.
Always make your payments on time to avoid extra fees.
Shop for Your New Vehicle
Whether you decide to lease or finance depends on which choice is best for you. Once you’ve made your decision it’s time to start shopping.
We can help. Click here to view our newest models.